When School Taxes Are $0: How Some Americans Pay Nothing — and What That Means for You

Most homeowners groan when they see their annual property tax bill, especially the school portion, which often makes up the largest share. In many cities and towns across the U.S., school taxes are the single biggest line item on your tax bill.

But what if your school tax was $0? It sounds like a fringe case, but in some places, that’s exactly what residents pay.

That’s the headline grabbing attention from a recent news story reporting that in two unusual New Jersey towns, the typical school portion of the tax bill can amount to zero dollars, due to unique local school financing structures.

Before we unpack why that can happen, and how it already does in several states, let’s look at how school taxes are normally set and why a zero bill is such a rarity.

School Tax 101: Why It’s Usually the Biggest Bill of the Year

Across much of the U.S., property taxes are made up of several components — county, city/town, special districts, and school districts. In most places, the school levy is the lion’s share of the total bill, because public schools are funded heavily through local property taxes.

Here’s why:

• School funding needs are relatively stable and large — they don’t fluctuate dramatically year to year.
  
  
• Local districts often levy based on the number of students and program costs, not on market value.
  
  
• Property values have been rising fast in many areas, which pushes total bills up even if tax rates stay the same.

In that context, a zero school tax bill sounds almost like a unicorn.

But in a few rare systems, it really can happen.

Why Some Towns Have $0 School Tax Bills

The aforementioned Yahoo report highlights a couple of towns in New Jersey where the school tax bill can be technically zero due to how revenue gets allocated and what other funding mechanisms are in place. (That includes local formulas for school budgets and state aid structures that shift more burden to state, not local, taxation.)

This situation is unusual because most school districts rely heavily on local property tax levies. But it illustrates a broader point:

Property tax bills — particularly the school portion — can vary wildly from place to place, depending on how local education funding is structured.

In high-spending areas in New Jersey, for example, the school portion alone can be enormous. In some towns it accounts for up to nearly three-quarters of total property tax bills, with average school taxes exceeding $16,000!

Here are some other real systems where residents might pay very little or no school tax, or structured relief exists:

Texas: $0 School Property Taxes for Many Homeowners

Probably the most dramatic example of policy-driven school tax relief in recent U.S. history comes from Texas, where voters and lawmakers have been aggressively trimming property tax burdens, especially the portion that goes to schools.

In November 2025, Texas voters approved a constitutional amendment to raise the homestead exemption from $100,000 to $140,000 of a home’s market value, meaning that portion of a homeowner’s property is excluded from local school taxes.

Texas doesn’t have a state income tax, and school district property taxes are assessed locally. Exemptions like this cut the taxable value dramatically and can push school taxes down to very low amounts for many homeowners, and, in certain combinations of exemptions and valuations, can approach zero for those qualifying households.

Even if homeowners don’t literally owe $0 in school tax, the state’s relief measures have put some homeowners in Texas in situations where they see minimal to no school tax liability, especially for seniors and primary residence homesteads with large exemptions.

How (and Why) School Tax Bills Vary So Much Across the U.S.

The fact that some Americans can owe $0 in school tax while others pay thousands is an uncomfortable reality of how education is financed in the U.S.

Some reasons include:

1. State Funding vs. Local Levies

Some states, like New Jersey, depend heavily on local property taxes to fund schools, but have formulas or court orders that shift more money depending on community wealth.
Other states, like Texas, are trying to reduce that local burden with statewide caps and constitutional amendments.

2. Differences in Property Values

In many areas, school tax rates apply to assessed property values. With surging home prices, even modest rates generate large bills.

3. Voter-Approved Measures

Some communities periodically vote on bond referendums or school levies that raise or lower the obligation. In rare cases, these levies fail or are structured in ways that temporarily reduce local taxes to zero.

So, How Do These $0 Tax Scenarios Actually Work?

Let’s break down the mechanisms:

Zero School Tax via Funding Formula

In places where the state provides large enough aid — and property values or tax rates are low — the local school levy portion of the bill can be zero. That’s largely what’s happening in the unusual New Jersey towns highlighted recently.

Zero School Tax Through Relief Legislation

In Texas, the $0 bill is made possible by constitutional tax relief programs that cap or eliminate the school tax portion for qualifying homeowners.

Why This Matters to Taxpayers Everywhere

Even if you don’t live in New Jersey or Texas, these examples highlight a bigger truth about property taxes:

• Not all property taxes are inevitable. Where the system is structured differently — either by state aid formulas or voter action — the tax burden can drop dramatically.
  
  
• Local funding formulas matter more than you think. Small changes to how schools are funded can lead to large swings in homeowners’ bills.
  
  
• Public perception vs. reality can be very different. Many taxpayers assume high bills are fixed, but they’re often the result of specific policy choices.

For property owners nationwide, understanding these differences and the potential for relief might mean:

• Exploring relief programs in your state
  
  
• Monitoring school funding legislation
  
  
• Advocating for tax reform that reflects local priorities

The idea of a $0 school tax bill might seem like a fantasy to most American homeowners, but as the New Jersey examples show, and as Texas residents are already experiencing, it’s not just possible; it’s happening.

What these outliers demonstrate is not that school funding has disappeared, but that the way we fund our schools, via a mix of local levies, state aid, and voter decisions, dramatically affects what taxpayers owe.

For many homeowners, understanding these mechanics could make a significant difference in next year’s property tax bill.

 

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